Former COO Jim Press owes IRS, credit union more than $1.4M
Quote:
Chrysler exec Jim Press owes IRS, credit union more than $1.4M
ROBERT SNELL
The Detroit News
Chrysler Group LLC Deputy Chief Executive Jim Press owes the IRS almost $1 million in delinquent taxes and is being sued by his credit union for defaulting on a $609,000 loan, according to records obtained by The Detroit News.
Oakland County records chronicle the toll financial industry turmoil and the automobile industry collapse have taken on one of its top executives, whose financial woes mirror those of blue-collar workers and average Joes living paycheck to paycheck -- only on a much grander scale. He recently hired a lawyer, Wallace Handler, who specializes in bankruptcy cases.
Handler and Chrysler spokeswoman Shawn Morgan declined comment this morning.
Last November, as the auto industry teetered on the brink of bankruptcy, and as Press lobbied senators to support a $25 billion bailout package, he was caught in his own financial trap, records show.
That month, Press defaulted on a $609,286 loan from Western Federal Credit Union and was pleading for more time. In a letter dated Nov. 11, 2008, and drafted on Chrysler stationery, Press blamed his money problems on the Auburn Hills automaker eliminating his year-end bonus and said two banks refused to loan him more money or refinance his home.
"In this terrible credit environment, I have exhausted other avenues of getting a new loan which would allow me to pay you off," Press wrote in the letter, obtained by The Detroit News. "My last and least desirable alternative is to notify you of the situation."
The letter was written the same week as his company launched a formal campaign to mobilize groups including employees, suppliers and dealers to contact congressional representatives on the importance of saving the auto industry and Chrysler.
It is rare for a highly paid executive to run into such financial problems, said executive compensation expert Paul Dorf, managing director of Compensation Resources, Inc. in New Jersey.
"Normally we don't think people who are making multi-millions of dollars are getting into that problem," he said. "The reality is people who make very little and people who make very much all get into financial problems. It is an anomaly that it came to light."
According to Oakland County Circuit Court records, Press had an unsecured personal line of credit with Toyota Federal Credit Union until the credit union merged with Western Federal in September 2007. Western Federal ended the practice of extending unsecured lines of credit and asked Press to pay off the loan, according to Press' letter.
Press didn't have the cash, however.
He asked for more time and the credit union agreed. He owed $816,000 and agreed to make four payments starting in June 2008, according to court records.
By August 2008, Press had repaid $410,000 but defaulted in November after failing to make the first of two $203,000 payments, court records indicate.
In the Nov. 11 letter, Press explained why.
"I am not able to make the November and February payments due to the elimination of bonuses, which was just announced by my company," Press wrote. "The basis of my agreement to make the November and February payments was the pending receipt of my year end bonus."
The bonus was eliminated as the auto industry tumbled to historic lows and amid Congressional backlash after CEOs of Detroit's three carmakers flew on private jets to Washington, D.C., to seek emergency financing.
It had been 14 months since Press was wooed away from Toyota Motor Corp. to run Chrysler's troubled sales operations.
Press joined Chrysler LLC in September 2007 as vice chairman and co-president, which was considered a coup because of his success at the Japanese automaker. But it was a costly coup as Press received a compensation package reportedly worth at least $50 million -- including a reported stake in Chrysler, which would have plummeted in value after the automaker filed bankruptcy April 30.
He was counting on a continued payday when he wrote Western Federal and asked for more time to repay the loan.
"My employment is not in jeopardy, and I still have monthly income to service the note as President and Vice Chairman of Chrysler LLC," Press wrote in the letter last November.
But last month, news surfaced that Press is expected to leave the automaker by year's end in a management shakeup under new Chief Executive Sergio Marchionne.
Dorf said the lawsuit and lien are an embarrassment for Press and Chrysler -- and may have factored into his departure.
"They don't need an embarrassment like that," he said. "If the company is saying, 'Wait a minute, we're considered the pariah of the auto industry for the kinds of changes we've made, the way we've had to lay off thousands of workers, plants and all that, you're supposed to be above the fray.'"
Despite Press' plea, the credit union sued him on June 30 in Oakland County Circuit Court for more than $467,000.
"Despite the demands for full payment by plaintiff and plaintiff's counsel, defendant has failed to pay...," Western Federal's lawyers wrote in a court filing.
Court records show the process server was unable to serve Press with a copy of the lawsuit.
The server went to his Birmingham home five times. Each time, there was no answer at the door, according to court records.
The server then went to Chrysler headquarters in Auburn Hills, but was turned away.In the letter to Western Federal, Press blamed the default on a "cash flow issue."
But records show he has other apparent financial problems.
The IRS filed a $947,410 lien against Press and his wife, Suwichada, on Sept. 1 claiming the Birmingham couple owes unpaid income taxes from 2007, according to Oakland County Register of Deeds records.
A lien is filed when taxes haven't been paid and gives the government a legal claim to a person's or company's property. Liens serve as security or payment for the tax debt.
The address listed on the tax lien is a 6,800 square-foot, six-bedroom New England-style mansion Press bought last year in Birmingham. He took out a $2.2 million mortgage in May 2008, according to Oakland County property records.
Press is trying to sell the home for $3.15 million and has listed it with SKBK Sotheby's International Realty of Birmingham.
It is the latest asset Press has tried to unload during the recession.
This summer, Press listed his four-story New York City townhouse off Park Avenue for $15.7 million.
Public records show he bought the townhouse for $13.5 million in December 2007 -- two months after being hired by Chrysler.
New York City property records show Press and his wife got a $12.96 million mortgage from Cerberus Capital Management II L.P., an affiliate of Chrysler-parent Cerberus Capital Management, L.P.
After drawing interest from several potential purchasers, Press opted to rent the townhouse to a tenant for a year, "to allow Mr. Press a bit more time to make a decision on whether to sell it," agent Steven Christopher Halstead said.
"It was an exceptional property, and like many other exceptional properties in New York City, fortunately there is always a group of people capable of buying them," Halstead added.
Press also owns a $470,000 condominium in New Orleans near the French Quarter, records show.
Maybe staying at Toyota would've been better for him.
FYI, Western Federal Credit Union is the CU for most Toyota employees. Toyota used to have their own CU (Toyota FCU), until they decided it was more cost effective for the company and had these services absorbed by the bigger credit union.
Yeah I read about this on autoblog. Crazy! More money, more problems. I know I can't say much cause I don't have that kind of income but if I went to an ailing company even if they paid me good, I wouldn't indulge too much cause as we can see Shitslyer is in the shitter.
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U.S. media is a systematic censorship on free speech. They don't like what they hear they don't report. Don't want to upset the political and advertising sponsors. Its so corrupted. While they don't have to agree with certain views, its their job to report and let US decide.
The truly puzzling life of Chrysler's deputy CEO
Fortune Magazine
How could a millionaire top executive with a chrome-plated reputation get in such financial trouble? The mysterious case of Jim Press.
By Mary M. Chapman Contributor
Last Updated: October 1, 2009: 12:25 PM ET
DETROIT (Fortune) -- When the news broke recently that Jim Press, the deputy CEO of Chrysler, is being hounded by creditors and the IRS for an array of debts, it presented a puzzle. How could an executive who worked at the top of the auto industry for decades get into such financial difficulty? And what turmoil was going on in the personal life of Press, who had been renowned in the industry for his Kansas-bred calm and quiet charm?
The answers appear to lie in two dramatic changes in his life, in which he abruptly left both his wife and his longtime employer for new situations. In 2006, the father of four startled colleagues when he appeared at a Florida car-dealer event with a new girlfriend, attendees told Fortune. The following week, his wife filed for divorce in Los Angeles.
The next year, the remarried executive jumped from his post as president of Toyota's North American unit, where he had worked for 37 years, to become one of the top three executives of Chrysler after its takeover by Cerberus Capital Management, the private-equity firm.
The first move may have contributed to the second, and both have proved to be costly. Even amid the financial mayhem the industry has suffered, the difficulties enmeshing Press stand out as the downfall of a revered industry figure, one who had particular credibility with car dealers. "He was an extremely effective leader," said Craig Zinn, a Toyota and Lexus dealer in Miami. "We miss him."
In his personal finances, Press had stretched himself thin, supporting four homes around the U.S., not long before the economic crisis hit. When his expected compensation fell, Press started missing payments. As first reported in the Detroit Free Press and Detroit News, Press is facing lawsuits and government liens totaling more than $1.4 million. (Press declined to comment for this story.)
California-based Western Federal Credit Union is suing him in Michigan Circuit Court, alleging that he defaulted on an $816,000 loan. The debt had started with an unsecured personal loan at the Toyota Federal Credit Union, which merged with Western Federal in 2007 and stopped making such loans.
Press had agreed to repay the loan in four installments, but ran short on cash. For that, he blamed Chrysler's dropping of bonuses late last year as it sought federal assistance, writing the credit union on Nov. 11, 2008: "Due to the turmoil in the automobile industry and uncertainty surrounding our ownership, my request for bonus payment was denied. I am attempting to arrange for a loan against my future bonus with my employer, which would allow me to pay this loan off."
He added: "You don't have to worry about my ability to pay, it's just a cash flow issue at this time. My employment is not in jeopardy, and I still have monthly income to service the note." Since December, the U.S. Treasury has loaned Chrysler more than $15 billion to keep it afloat and merge it with Fiat.
Another arm of the government, the IRS, has placed a lien of nearly $950,000 on the 6,800-square-foot home that Press and his current wife own in suburban Birmingham, Mich., for which he took out a $2.2 million mortgage last May, because of unpaid 2007 taxes, according to court filings. The couple has put the house on the market for $3.15 million, but sales prospects in the Detroit real-estate market are bleak.
Press has at least three other homes: a $2 million residence in Los Angeles, a $470,000 condo in New Orleans, and a townhouse on Manhattan's Upper East Side that he put on the market this year for $15.7 million. Just three months after he joined Chrysler, an arm of Cerberus gave Press and his wife a mortgage of $12.96 million to buy the townhouse, for which they paid $13.5 million, records show.
At Toyota, Press was renowned for his devotion to the company and his profound work ethic, says Bob Page, a close friend of Press' and the owner of a Toyota dealership in Southfield, Mich. Press, known for his long workdays, chafed at colleagues who didn't appear to put in the hours. "Most everybody enjoyed working with him, but if you wanted to go nine-to-five, you probably weren't high on his list," he said.
Business was motoring along relatively well in the car industry in 2006 when Press, now 62, started dating Suwichada Busamrong, a Thai native and the mother of two small children. Press took Busamrong to a Lexus dealer event on June 4-7 at the Ritz-Carlton hotel in Naples, Fla., according to Yanay Weaver, a manager for the Lexus southern region.
The following week, on June 14, Press' wife Linda filed for divorce in Los Angeles Superior Court, records show. (Her divorce attorney did not return calls for comment.) Peter Blackstock, a Lexus dealer in Seaside, Calif., said he first met Busamrong at the Naples meeting. "[Press] took me aside and said 'I'd like you to meet my friend.' I knew they weren't married, especially the way he introduced her. I know a lot of people there were surprised."
Colleagues who met Busamrong describe her as attractive and in her 30s. Lexus dealer Zinn, who talked with Busamrong at the Naples event, said she struck him as "haute couture to the max, Chanel or Dior." In January of this year, she enrolled as an interior-design student at Detroit's College for Creative Studies.
While it's unclear whether the change in Press' personal life affected his career at straight-laced Toyota (TM), notice was taken that Press was a more complicated person than previously assumed. A high-level Toyota executive who attended a dinner at the Toyota Technological Institute in Chicago in October 2006 said Press introduced Busamrong as his wife. She wore engagement and wedding rings, he recalls.
"It was an uncomfortable evening," he said. "Eyebrows were raised. People were aghast." And while Press was a hero to dealers, he may have had difficulty managing up. The Toyota source said Press was "hard to read," someone who "had difficult relations with the people he reported to."
Around that time, Press, who had long been based in Los Angeles, moved to Toyota's New York office, which didn't please him. His golden career at Toyota, where he was the first American appointed to Toyota Motor Corp.'s board, seemed to be reaching its limits.
"I think he felt like he was being pigeon-holed in New York," says his longtime friend Page. "He said he didn't want to be put on a back burner." The executive's dimming prospects at Toyota and his widening financial commitments seemed to inspire the leap to Chrysler. "He saw an opportunity to help Chrysler, and be taken care of financially," says Page, "Except now, he can't sell his properties. He's caught in an economic squeeze."
Court records show that Press pays his former wife $40,000 a month in spousal support and $16,000 a month in child support. The court documents put the executive's Chrysler salary at $2.4 million annually, plus a $3 million signing bonus. His overall compensation package when he went to Chrysler was reported as high as $50 million, but the value of any equity stake in Chrysler has plummeted after the automaker's trip through bankruptcy. Chrysler spokeswoman Shawn Morgan said the company doesn't comment on "private matters."
Press was one of the few top executives who was carried over after the merger with Fiat, but he reportedly will leave Chrysler by year's end, as new chief executive Sergio Marchionne reworks his team. It was considered a real coup when Chrysler lured him from Toyota, but the luster faded early this year when Press pointedly urged Chrysler dealers to accept more vehicles, even though they were overrun already. Later, when hundreds of Chrysler dealers were dropped by the automaker, they were left with vast quantities of unsold inventory.
In a visit with Fortune editors after his move to Chrysler, Press wore a tattered string on his wrist, a symbol of his values that contrasted with his crisp business suit. "It reminds you that in life, you just need enough to get along," he explained to the New York Times last year. In his next chapter, his current challenges will put that philosophy to a real road test.
Very very uncommon, u really wonder how someone that smart and educated and with a huge income can end up like these?
Anyway selling that new york asset would seal the deal I guess.
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